Asia Grain Outlook on Friday: Thai goverment steps in again; rice prices fall

 

 

A recent decline in Thai rice prices has encouraged the government to again step into the market and buy paddy directly from farmers ahead of the main harvest, which is due to get underway in earnest next month, traders and officials said Friday.

 

Thai 5%-broken rice prices have fallen around US$13/tonne in a week to around US$495/tonne, with traders citing high stocks and the looming prospect of a large harvest as the main factors dragging prices lower.

 

"Farmers aren't happy, so it appears the government is going to start buying paddy directly again to halt the slide in prices," said Chookiat Ophaswongse, president of the Thai Rice Exporters Association.

 

Under a previous pledging program, the Thai government bought paddy directly from farmers at a fixed THB11,800/tonne, but Chookiat said the new price has been set at THB9,000/tonne.

 

"It will likely be a short-term measure, just to try and prop up prices before the harvest gets underway properly. I don't see prices falling too much further from current levels; 5%-broken will likely stabilize around US$490-US$500/tonne," he said.

 

This week, rice traders in Vietnam, the world's second largest exporter, said they expect Vietnamese rice prices to rise in the coming weeks ahead of an expected increase in demand from the Philippines in the wake of recent storm damage to crops.

 

Thursday, Vietnam's 25% broken rice was being offered at US$355/tonne, FOB basis, compared with US$345/tonne a week earlier.

 

The Philippines has said it will tender for 250,000 tonnes of 25%-broken rice Oct. 30.

 

 

China Corn Harvest Picks Up Pace

 

In China, meanwhile, corn prices have come under pressure in recent days with the pace of new crop entering the market increasing after the recent National Day holiday, traders said.

 

As of Thursday, new corn prices in Nanyang in Henan province were around CNY1,560/tonne, down CNY140 from the pre-holiday level, while prices in Qinhuangdao in Hebei province were at CNY1,650/tonne, down CNY20-CNY40.

 

The harvest of new corn increased expectations of more supply, and several big enterprises in Shandong province first reduced the offering prices, causing buyers in consumption areas to stay on the sidelines and wait for prices to be cut more, the China Corn Network said in a note this week.

 

However, some analysts said the fall could be limited due to the government's support policies and an expected decline in output this year. The government said earlier this week that it would continue to buy corn from farmers if prices head lower.

 

Asia-based traders also said regional buyers will continue to monitor Chicago Board of Trade corn futures for price direction in the coming weeks, though importers here appear to be in no rush to step into the market, despite a generally improving price outlook.

 

"Buyers here are on the sidelines watching the U.S.; CBOT corn does appear to have turned the corner following its recent decline, but weather in the U.S. and equity market movements will continue to be the main influencing factors," said Okato Shoji commodities analyst Koname Gokon.

 

At 0740 GMT, e-CBOT corn was trading up 4.20 U.S. cents at US$3.772/bushel, having declined in the U.S. overnight.

 

Meanwhile, China's October soy imports will likely decline to 2.01 million tonnes, according to the latest report by the Ministry of Commerce.

 

The volume would mark the lowest monthly imports in two years.

 

China imported 2.75 million tonnes of soy last month, down 33% from a year earlier - the lowest monthly volume so far this year.

 

In other regional grain news, Japan's Ministry of Agriculture, Forestry and Fisheries said Thursday it has purchased 132,000 tonnes of wheat in its weekly wheat tender.

 

The wheat is of U.S., Australian and Canadian origin and will be shipped to Japan between Dec. 1 and Dec. 31, said a ministry official.